Marketing                                               E-528-529, sector-7,                                           Dwa...
MarketingWhy Choose Edu Proz for distance learning?   •   Edu Proz provides class room facilities free of cost.   •   In E...
Marketing                              Karnataka State Open University(KSOU) was established on 1st June 1996 with the ass...
Marketing                                               E-528-529, sector-7,                                           Dwa...
MarketingWhy Choose Edu Proz for distance learning?   •   Edu Proz provides class room facilities free of cost.   •   In E...
Marketing                              Karnataka State Open University(KSOU) was established on 1st June 1996 with the ass...
MarketingUnit-1-Introduction to MarketingIntroduction:Marketing is an activity which can be seen every where. Any time you...
MarketingWhen the purchase and sale of goods involve buyers and sellers of a region, such as a large townmarket catering t...
MarketingConsumer Goods Market –This is a market, where the buyers who are individuals and households purchase a variety o...
MarketingIn this era of rapid changes, it is marketing which keeps the business in close contact with itseconomic, politic...
Marketing   •   Each party has something that could be of value to other party.   •   Each party has desire, willingness a...
Marketing‘Product is a generic term used to describe what is being offered by a seller or marketer. It maybe a good, a ser...
MarketingValue is primarily a function of quality, service and cost. Value increases with increase in qualityand service a...
Marketing      face-to-face in order to sell the goods. The purchaser may be end customer or an      intermediary, such as...
MarketingMarketing provides an effective channel of communication to the company with its consumersby way of advertising a...
Marketing     Myopia” by Prof. Theodore Levitt of Harvard Business School. He recommended that     companies should have a...
Marketing                                                         11. customers                                           ...
Marketingmarketers, and their application in serving the customers with the help of company’s employeesas well as intermed...
Marketinga. Who its customer is? Mission statement 4 states “family who are going to beautysaloons” as their customers.b. ...
Marketing9. To strive for self-reliance through indigenizationDesigning an appropriate business portfolio.After setting mi...
MarketingFigure 2.1.High LowRelative Market ShareAxis components:1. Market growth rate: The rate at which market is growin...
MarketingDogs: SBU’s in this category generates less cash for the company as it operates in low growthand low market share...
MarketingEach cell in the model represented by the particular strategy namely, invest strategy, protectstrategy, harvest s...
MarketingAfter analyzing the existing business of the company, let us discuss company’s future plans i.e.growth or downsiz...
MarketingIn case of market development company identifies and develops new markets for its existingproductsCafé coffee day...
Marketingb. Involve action-oriented and operational issuesc. Relatively short range and low riskd. Modest costs: depend up...
Marketing2) Weakness is something a firm lacks, does poorly, or a condition placing it at a disadvantage.Resource weakness...
MarketingFigure 2.4.The marketing mix3. Place: Distribution of goods from the factory to the target customer. It includes ...
MarketingLearning Objective 3:Discuss how to design marketing planning modelsMarketing planning:Though strategic plan exis...
Marketing6. How much time it takes to complete the program?7. How much will it cost?8. Marketing Budget9. Control: Any pro...
Marketing1. Comprehensive.2. Systematic3. Independent4. periodicComponents of marketing audit:1. Marketing environment aud...
Marketinglevels i.e. external macro environment and external micro environment. The macro environmentinvolves political an...
MarketingThe companyRemember in the previous unit we discussed about the strategic and marketing planning.Deducing a strat...
MarketingPublicsThese are microenvironment groups, which helps company to generate the financial resources,creating the im...
Marketingc. Reseller marketd. Government market ande. International marketYou will come to know about these five different...
MarketingDemography: The study of population characteristics like size, density, location, gendercomposition, age structur...
MarketingMarital status of the population:TABLE 3.2: POPULATION BY MARITAL STATUS AND SEX: INDIA – 2001                   ...
Marketing                                                           Absolute NumbersLevel of education                    ...
MarketingTotal migrants           98,301,342           32,896,986         65,404,356 100.0 100.0 100.0Reason for migration...
MarketingGovernment policies, legislations, regulations, and stability will directly affect the business.Therefore it is i...
Marketingper capita expenditure is coming down. Hence extra efforts are required by these companies tosell their products....
Marketing2. Time short people: This segment involves people who work long hours and have lesspersonal time. These people a...
Marketinga. Incomeb. Spending powerc. Inflationd. Interest ratee. Raw materialsf. Taxation4. Technology environmenta. Entr...
MarketingThe Marketing Departments need to develop Marketing Information Systems that providethem information about buyer ...
Marketing1. It allows marketing managers to carry out their analysis, planning implementation and controlresponsibilities ...
Marketing3. Marketing Research System4. Analytical Marketing SystemFig 4.1 The Marketing Information SystemInternal Record...
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  1. 1. Marketing E-528-529, sector-7, Dwarka, New delhi-110075 (Nr. Ramphal chowk and Sector 9 metro station) Ph. 011-47350606, (M) 7838010301-04 www.eduproz.inEducate Anytime...Anywhere..."Greetings For The Day"About EduprozWe, at EduProz, started our voyage with a dream of making higher education available for everyone. Since itsinception, EduProz has been working as a stepping-stone for the students coming from varied backgrounds. The bestpart is – the classroom for distance learning or correspondence courses for both management (MBA and BBA) andInformation Technology (MCA and BCA) streams are free of cost. Experienced faculty-members, a state-of-the-art infrastructure and a congenial environment for learning - are the fewthings that we offer to our students. Our panel of industrial experts, coming from various industrial domains, leadstudents not only to secure good marks in examination, but also to get an edge over others in their professional lives.Our study materials are sufficient to keep students abreast of the present nuances of the industry. In addition, we giveimportance to regular tests and sessions to evaluate our students’ progress. Students can attend regular classes of distance learning MBA, BBA, MCA and BCA courses at EduProz withoutpaying anything extra. Our centrally air-conditioned classrooms, well-maintained library and well-equipped laboratoryfacilities provide a comfortable environment for learning.Honing specific skills is inevitable to get success in an interview. Keeping this in mind, EduProz has a careercounselling and career development cell where we help student to prepare for interviews. Our dedicated placementcell has been helping students to land in their dream jobs on completion of the course.EduProz is strategically located in Dwarka, West Delhi (walking distance from Dwarka Sector 9 Metro Station and 4-minutes drive from the national highway); students can easily come to our centre from anywhere Delhi andneighbouring Gurgaon, Haryana and avail of a quality-oriented education facility at apparently no extra cost.EDUPROZ Page 1
  2. 2. MarketingWhy Choose Edu Proz for distance learning? • Edu Proz provides class room facilities free of cost. • In EduProz Class room teaching is conducted through experienced faculty. • Class rooms are spacious fully air-conditioned ensuring comfortable ambience. • Course free is not wearily expensive. • Placement assistance and student counseling facilities. • Edu Proz unlike several other distance learning courses strives to help and motivate pupils to get high grades thus ensuring that they are well placed in life. • Students are groomed and prepared to face interview boards. • Mock tests, unit tests and examinations are held to evaluate progress. • Special care is taken in the personality development department. "HAVE A GOOD DAY"EDUPROZ Page 2
  3. 3. Marketing Karnataka State Open University(KSOU) was established on 1st June 1996 with the assent of H.E. Governor of Karnatakaas a full fledged University in the academic year 1996 vide Government notificationNo/EDI/UOV/dated 12th February 1996 (Karnataka State Open University Act – 1992).The act was promulgated with the object to incorporate an Open University at the State level forthe introduction and promotion of Open University and Distance Education systems in theeducation pattern of the State and the country for the Co-ordination and determination ofstandard of such systems. Keeping in view the educational needs of our country, in general, andstate in particular the policies and programmes have been geared to cater to the needy.Karnataka State Open University is a UGC recognised University of Distance Education Council(DEC), New Delhi, regular member of the Association of Indian Universities (AIU), Delhi,permanent member of Association of Commonwealth Universities (ACU), London, UK, AsianAssociation of Open Universities (AAOU), Beijing, China, and also has association withCommonwealth of Learning (COL).Karnataka State Open University is situated at the North–Western end of the Manasagangotricampus, Mysore. The campus, which is about 5 kms, from the city centre, has a sereneatmosphere ideally suited for academic pursuits. The University houses at present theAdministrative Office, Academic Block, Lecture Halls, a well-equipped Library, Guest HouseCottages, a Moderate Canteen, Girls Hostel and a few cottages providing limitedaccommodation to students coming to Mysore for attending the Contact Programmes or Term-end examinations.EDUPROZ Page 3
  4. 4. Marketing E-528-529, sector-7, Dwarka, New delhi-110075 (Nr. Ramphal chowk and Sector 9 metro station) Ph. 011-47350606, (M) 7838010301-04 www.eduproz.inEducate Anytime...Anywhere..."Greetings For The Day"About EduprozWe, at EduProz, started our voyage with a dream of making higher education available for everyone. Since itsinception, EduProz has been working as a stepping-stone for the students coming from varied backgrounds. The bestpart is – the classroom for distance learning or correspondence courses for both management (MBA and BBA) andInformation Technology (MCA and BCA) streams are free of cost. Experienced faculty-members, a state-of-the-art infrastructure and a congenial environment for learning - are the fewthings that we offer to our students. Our panel of industrial experts, coming from various industrial domains, leadstudents not only to secure good marks in examination, but also to get an edge over others in their professional lives.Our study materials are sufficient to keep students abreast of the present nuances of the industry. In addition, we giveimportance to regular tests and sessions to evaluate our students’ progress. Students can attend regular classes of distance learning MBA, BBA, MCA and BCA courses at EduProz withoutpaying anything extra. Our centrally air-conditioned classrooms, well-maintained library and well-equipped laboratoryfacilities provide a comfortable environment for learning.Honing specific skills is inevitable to get success in an interview. Keeping this in mind, EduProz has a careercounselling and career development cell where we help student to prepare for interviews. Our dedicated placementcell has been helping students to land in their dream jobs on completion of the course.EduProz is strategically located in Dwarka, West Delhi (walking distance from Dwarka Sector 9 Metro Station and 4-minutes drive from the national highway); students can easily come to our centre from anywhere Delhi andneighbouring Gurgaon, Haryana and avail of a quality-oriented education facility at apparently no extra cost.EDUPROZ Page 4
  5. 5. MarketingWhy Choose Edu Proz for distance learning? • Edu Proz provides class room facilities free of cost. • In EduProz Class room teaching is conducted through experienced faculty. • Class rooms are spacious fully air-conditioned ensuring comfortable ambience. • Course free is not wearily expensive. • Placement assistance and student counseling facilities. • Edu Proz unlike several other distance learning courses strives to help and motivate pupils to get high grades thus ensuring that they are well placed in life. • Students are groomed and prepared to face interview boards. • Mock tests, unit tests and examinations are held to evaluate progress. • Special care is taken in the personality development department. "HAVE A GOOD DAY"EDUPROZ Page 5
  6. 6. Marketing Karnataka State Open University(KSOU) was established on 1st June 1996 with the assent of H.E. Governor of Karnatakaas a full fledged University in the academic year 1996 vide Government notificationNo/EDI/UOV/dated 12th February 1996 (Karnataka State Open University Act – 1992).The act was promulgated with the object to incorporate an Open University at the State level forthe introduction and promotion of Open University and Distance Education systems in theeducation pattern of the State and the country for the Co-ordination and determination ofstandard of such systems. Keeping in view the educational needs of our country, in general, andstate in particular the policies and programmes have been geared to cater to the needy.Karnataka State Open University is a UGC recognised University of Distance Education Council(DEC), New Delhi, regular member of the Association of Indian Universities (AIU), Delhi,permanent member of Association of Commonwealth Universities (ACU), London, UK, AsianAssociation of Open Universities (AAOU), Beijing, China, and also has association withCommonwealth of Learning (COL).Karnataka State Open University is situated at the North–Western end of the Manasagangotricampus, Mysore. The campus, which is about 5 kms, from the city centre, has a sereneatmosphere ideally suited for academic pursuits. The University houses at present theAdministrative Office, Academic Block, Lecture Halls, a well-equipped Library, Guest HouseCottages, a Moderate Canteen, Girls Hostel and a few cottages providing limitedaccommodation to students coming to Mysore for attending the Contact Programmes or Term-end examinations.EDUPROZ Page 6
  7. 7. MarketingUnit-1-Introduction to MarketingIntroduction:Marketing is an activity which can be seen every where. Any time you try to buy something,marketing has a role to play. It is often viewed by many as being advertising or sales promotionor marketing research. But it is a concept much larger than any of them or all of them puttogether. Marketing consists of all activities designed to create exchanges which satisfy humanor organizational needs or wants in a way that brings profit for the firm. It performs the task ofboth identifying and satisfying customer needs. This helps business enterprises in anticipatingcustomer demand and creating satisfied customers through conception, production, promotionand physical distribution of goods and services. No example can better illustrate this than thepopularity of Mobile Phone. In less than fifteen years, mobile phones have become such animportant part of our lives that many of us cannot think of a life without it.This unit deals with meaning, importance and functions of marketing. The old concepts ofmarketing under which companies have conducted marketing activities and the modern conceptswhich are now being used are explained in detail.Learning Objective 1: Define market and marketing.Market and MarketingWhat is Market?Originally, a “Market” was a public place in a town or village, where household provisions andother objects were available for sale. The definition of market has expanded in this globalizedworld. The traders may be spread over a whole town, or city or region or a country and yet forma market. For example, stock market, Oil & Oilseeds market, Steel or Metals market etc wherepeople across the countries can participate in the business. The essentials of a market are (i) acommodity / item which is dealt with, (ii) the existence of buyers and sellers, (iii) a place; be it acertain region, a country or the entire world and (iv) interactions between buyers & sellers tofacilitate transactions. 1. On the basis of Geographic Area –Local Market is the place where the purchase and sale of goods / services involve buyers andsellers of a small local area. The example of local market is a village or a town, market. In thismarket day to day requirement like vegetable, fruits, meat and fish are sold.Regional Market –EDUPROZ Page 7
  8. 8. MarketingWhen the purchase and sale of goods involve buyers and sellers of a region, such as a large townmarket catering to needs of a group of villages or towns, such a market is common in case ofwholesale / retail sale of food grains.National Market –When the purchase and sale of goods involve both buyers and sellers of the entire nation then itis called as national market. This type of market in the case of commodities such as Cotton &Textiles Market located in Mumbai, Tea and Jute Markets located in Kolkata. With the advent ofinternet, this concept is also getting obsolete, as you can operate in any market, sitting in yourtown or city.Global or World Market –When the purchase and sale of goods involve buyers and sellers of many nations, there is said tobe a World or Global Market. Many commodities such as Gold, Silver, Tea, Coffee, Spices aresold in such global markets. Many manufactured products and specialized services are also soldacross the globe by many companies. Producers of Coca-cola and Sony brand sell their productsin the global market in almost all countries. Indian companies like TCS, Infosys, and WIPROsell and provide their IT enabled services to many companies in different parts of the world.They operate in a Global Market. 1. On the basis of Nature of Competition in the market –Perfect Market –It refers to a market or market situation where there is perfect competition. Competition is said tobe perfect when (a) the sellers & buyers of a particular product are so many that none of themhave to sell or buy at a single uniform price. (b) Price is determined by the market forces ofsupply & demand.Imperfect Market –In contrast to the perfect competition, the imperfect market will have imbalance between numberof buyers and sellers. This market is further divided into three parts. They are Monopoly,Monopolistic and oligopoly. In case of monopoly, single seller dominates the entire marketwhere as in oligopoly few sellers dominate the market. The details of these types of markets willbe discussed in the pricing unit. 1. On the basis of Nature of Goods Sold –Consumer Goods Market –Definition: A Consumer Goods Market is defined as a market where the final output of the firmgoes for the consumption of individual or household.EDUPROZ Page 8
  9. 9. MarketingConsumer Goods Market –This is a market, where the buyers who are individuals and households purchase a variety ofproducts and services to satisfy their needs and wants. For example, an individual buys achocolate for his personal consumption whereas a family buys a refrigerator for household orfamily consumption. Products sold in consumer goods market are classified as Non-Durables,such which are frequently purchased such as bathing soap, detergent etc. and Durables such asrefrigerator, TV Set, Washing Machine, Car, Clothing etc. Non-Durables are also known asFMCG – Fast Moving Consumer Goods e.g. Soap, detergent etc…Industrial Goods Market –Definition: A business market is defined as a market where output of one firm goes either as rawmaterial, goods in process or as consumables of another industry.This market is also known as organizational or B 2 B market. It is made up of organizationsincluding manufacturing units, service firms, government departments and other businessenterprise. The products which are sold in the industrial goods market are typically, rawmaterials, machines, machine tools, equipments, components and spares etc. Generally, thebuyers of industrial goods, purchase products and services either for producing other productsand services which can be sold in the consumer markets or for using them to facilitate theoperation of business enterprise. In many such cases, the buyer is an organization whoseconsumption will depend on how the end user’s demand will change. Hence, in businessmarkets, the demand is a derived demand. Demand for steel will depend on the consumption ofsteel equipments, rods and other accessories in the construction and real estate sector.Non-Profit and Government Markets –This market which consists of Non-Profit organizations such as social-service agencies,educational organizations, charitable organizations and Government Departments and agenciesneeds special skills to sell to them. These buyers have limited purchasing power which is whypricing to this market needs to be planned carefully. Government, which is a large buyer, makespurchases on the basis of tenders, bids and negotiation.What is Marketing?Marketing is a set of business activities that facilitate movement of goods and services fromproducer to consumer. It is an ongoing process of discovering and translating consumer needsinto products and services, creating demands for them, serving the customer and his demandthrough a marketing programme of promotion and distribution to fulfill the company’s marketinggoals in a competitive environment.It is evident that customer, his needs and wants are very important aspects of today’s marketing.Customer focus is the very essence of marketing and his viewpoints should be taken into accountwhile making marketing decisions.EDUPROZ Page 9
  10. 10. MarketingIn this era of rapid changes, it is marketing which keeps the business in close contact with itseconomic, political, social and technological environment and informs it of events and changesthat can influence its activities.American Marketing Association (AMA) offers the following definition of Marketing.( AMA2004)Definition: Marketing is an organization function and a set of process for creating,communications and delivering value to customers and for managing customer relationships inways that benefit the organization and its stake holders.The Chartered Institute of Marketing defines Marketing as:Marketing is the management process responsible for identifying, anticipating and satisfyingcustomer requirements, profitably.Having understood what a Market is and what is Marketing, we will now look what is anexchange and the exchange process.The Exchange ProcessToday’s marketing system has evolved from the time of a simple barter of goods through thestage of a money economy to today’s complex marketing. Throughout all these stages,exchanges have been taking place. In small town and villages there were artisans such ascarpenters, weavers, potters blacksmiths, barbers and others such service providers whoproduced goods and services not only for their own consumption but also for exchanging withothers what they could not produce but needed. This was barter system of exchange. For atransaction to take place between two parties, it was necessary that there be needs and wants onboth sides. The development of money came to act as a common medium, and the exchangeprocess became very easy and convenient.Fig.1.1. below shows the exchange process undermoney economy in which products and services flow to the market from the producers andsellers and money, the value of the products and services, flow from the buyers to the sellers.Figure 1.1Thus, exchange is an act of obtaining a desired product or service from someone by offeringsomething in return. This exchange process will continue as long as human society existsbecause satisfying one’s needs is the basic instinct of human beings and no one can produceeverything that he /she needs. For an exchange process to take place, between two or moreparties, few conditions have to be met. They are:EDUPROZ Page 10
  11. 11. Marketing • Each party has something that could be of value to other party. • Each party has desire, willingness and ability to exchange. • Each party is capable of communicating and delivering. • Each party has the freedom to accept or reject the offer.Learning Objective 2- Understand the concepts and functions of marketing.Core ConceptsThere are certain fundamental concepts and tasks which one needs to know to fully understandthe marketing function. These concepts provide foundation for a marketing orientation and tomanage the marketing function. 1. Needs and WantsThe marketer’s task lies in satisfying human needs and wants through the exchange process. It isalleged that “marketing creates needs” and makes people buy things they do not actually need. Inreality, marketing or marketers do not create “needs”, but they create “wants”. Needs are thebasic human requirements of food, clothing shelter water and air. When we desire certainspecific objects or items to fulfill these needs, they are called wants. For example, when a personis hungry, he can satisfy his hunger by taking a simple meal at home. Instead, if he wants to eat aPizza or a Hamburger or a 5-Star Hotel meal, it is not a ‘need’ but a ‘want’.The task of a marketer is to influence our wants rather than needs. He does so along with otherinfluential such as socio-cultural forces and institutions such as family, religion, and differentreference groups.Marketers, suggest to consumers that a particular car would satisfy the person’s need for esteem.They do not create the need for esteem, but try to point out how a particular product wouldsatisfy that need. 1. DemandHuman wants are unlimited, but their resources are limited. When a want for an object is backedor supported by buying ability, willingness to spend and desire to acquire a product / service, itbecomes a potential demand. The task of assessing or estimating demand is very crucial for amarketer. He should understand the relationship of the demand for his product with its price.Demand forecasting is essential for allocation of resources in a company. 1. Product and ServicesEDUPROZ Page 11
  12. 12. Marketing‘Product is a generic term used to describe what is being offered by a seller or marketer. It maybe a good, a service or idea, which can be marketed by offering a set of benefits it offers tocustomers to satisfy their needs. However, there is a distinction between products and services.When we say ‘product’ we mean a physical or a tangible product such as a tooth paste, arefrigerator or a mobile phone, whereas ’service’ refers to an act, performance, a benefit andindicates intangibility and absence of ownership or possession. Services can include bankingservice, hospitality service, airlines service, health service, entertainment service etc. Thus, aproduct can be defined as anything that can be offered to market to satisfy a need or want.Today, many types of entities such as goods, services, experiences, events, persons, places andideas are being marketed. 1. Target MarketVery few products can satisfy everyone in the market. Therefore, marketers divide the marketinto distinct groups of buyers who have similar preferences. These groups are called segmentswith their own specific demographic, psychographic and behavioral characteristics. The marketerdecides as to which of these segment or segments offer highest opportunity for his company. Foreach of these target markets, the firm develops a product / service suited to their needs. TATAgroup has recently designed an economy car called ‘NANO’ is priced around Rs.1 Lakh. Thetarget market for this car is all aspirants who dream of owning a car but cannot afford cars whichare now available for minimum Rs.2.5 Lakh. A Target Market is the group of people at whom amarketer targets his marketing efforts to sell his goods and services. 1. Marketing ManagementMarketing Management which is also the title of this course refers to all the activities which themarketing managers, executives and personnel have to undertake to carry out the marketingfunction of the firm. It involves (i) analyzing the market opportunities by under taking consumerneeds and changes taking place in the marketing environment, (ii) planning the marketingactivities, and (iii) implementing marketing plans and settings control mechanism to ensuresmooth and successful accomplishment of the organizations goals. Marketing Management is acritical function, especially in highly competitive markets. It provides competitive edge to anorganization through strategic analysis and planning. 1. Values and SatisfactionIn developed and developing economies, consumers have several products or brands to choose tosatisfy his/her need. Consumers’ perceptions about value that they can expect from differentproducts or services depend upon several factors. Sources that build the customer expectationsinclude own experience with products, friends, family members, consumers’ reports andmarketing communications. Customer value is the difference between total benefits received andtotal costs incurred by him in acquiring the product or services. The types of benefits could beproduct’s functional value, or its brand related image value and any accompanying service value.The types of costs a customer can incur may be monetary cost and energy cost.EDUPROZ Page 12
  13. 13. MarketingValue is primarily a function of quality, service and cost. Value increases with increase in qualityand service and decreases with increase in cost. Value is an important marketing concept and thetask of marketing is to identify, create, communicate, deliver and monitor customer value. �Customers generally experience satisfaction when the performance level meets minimumperformance expectations of a product or service. When the performance as perceived exceedsthe expected performance level, the customer will be not just satisfied, but delighted. Thuscustomer satisfaction or delightment with respect to a product or service encourages customers tocome back and repurchase the product or service in future. Satisfied customers can be an asset tothe marketing company over a period of time, as they will spread favorable word-of-mouthinformation or opinions.Functions Of MarketingThe delivery of goods and services from producers to their ultimate consumers or users includesmany different activities. These different activities are known as marketing functions. Differentthinkers have described these functions in different ways. Some of the most important functionsof marketing are briefly discussed below:- 1. Marketing Research and Information ManagementMarketers need to take decisions scientifically. Marketing research function is concerned withgathering, analyzing and interpreting data in a systematic and scientific manner. The types ofmarket information could be analysis of market size and characteristics, consumer tastes andpreferences and changes in them from time to time, channels of distribution and communicationand their effectiveness, economic, social, political and technological environment and changestherein. A company can procure such information from specialized market research agencies,government or can decide to collect themselves. 1. Advertising and Sales Promotion – Advertising is a mass media tool used to inform, persuade or remind customers about products or services. It is an impersonal message targeted at a chosen group through paid space or time. 2. Sales Promotion is a short-term incentive given to customers or intermediaries to promote sales. It supplements advertising and personal selling and can be used at the time of launching a new product or even during its maturity period. 3. Product Planning and Management – A Marketer should identify the needs and wants of consumers, develop suitable products / services and make them available. Marketer is also required to maintain the product and its variations in size, weight, package and price range according to the changing needs and requirements of his customers. Information available through Market Research helps product management in taking appropriate decisions while planning the marketing efforts. 4. Selling – This function of marketing is concerned with transferring of products to the customer. An important part of this function is organizing sales force and managing their activities. Sales force management includes recruitment, training, supervision, compensation and evaluation of salesmen. They need to be assigned targets and territories where they can operate. The salesmen interact with prospective purchasersEDUPROZ Page 13
  14. 14. Marketing face-to-face in order to sell the goods. The purchaser may be end customer or an intermediary, such as a retailer or a dealer. 5. Physical Distribution – Moving and handling of products from factory to consumers come under this function. Order processing, inventory, management, warehousing and transportation are the key activities in the physical distribution system. 6. Pricing – This is perhaps the most important decision taken by marketer, as it is the only revenue fetching function and success and failure of the product may depend upon this decision. Therefore, the decision regarding how much to charge should be taken such that the price is acceptable to the prospective buyers and at the same time fetches profits for the company. While deciding on the price, the factors to be considered are competition, competitive prices, company’s marketing policy, government policy, and the buying capacity of target market etc.Learning Objective 3: Explain the importance of marketing.Importance Of Marketing.Peter Drucker, the famous management thinker in one of his classic articles has said “Marketingis everything”. All other activities in the organization are support services to the marketingstrategy that the company pursues. Marketing is important not only to the company but to theconsumers and society and to the economy.Consumer stands to benefit from marketing activities. He has more alternatives to choose from,improved and better quality products are available and he is able to buy goods at convenientlocations. Thanks to much improved customer service, a consumer is able to complain andexpects his complaint to be attended in reasonable time. He can now buy with credit or debit cardor cash or on installments.For the society as a whole, marketing is important because it acts as a change agent makingpeople use latest products and improves the standard of living of the people. As we know, themain objective of marketing is to produce products and services for the society as per their needsand tastes, and while doing so it creates demand for these goods and services, encourages themto use them, thus leading to higher demand and sales. This higher demand allows the company toachieve economies of scale in both production and distribution resulting in decrease inproduction and distribution costs which can be used to reduce prices to consumers.For a company in any business, marketing is considered to be the most important activity. Ithelps an organization to keep abreast of changes taking place in the market and consumer tastesand preferences through market research. Based on this reliable data, it responds to these changesby rectifying any drawbacks in its products or changing its competitive strategy. Thus thecompany’s decision- making and planning are not based on just hunches but on sound marketinformation. The firm that follows such practices is sure to prosper under all conditions.EDUPROZ Page 14
  15. 15. MarketingMarketing provides an effective channel of communication to the company with its consumersby way of advertising and sales promotion. Marketing thus brings revenue and earns goodwillfor the company.Successful operation of marketing activities creates, maintains and increases the demand forgoods and services in the economy. It results in the increased level of production. This, in turn,increases the national income, which is beneficial to the economy. Marketing operations requirethe services of intermediaries such as wholesalers, retailers, transporters, and service provides forstorage, finance, insurance and advertising. These services provide employment in largenumbers.Learning objectives 4: Differentiate between types of marketing orientations.Marketing OrientationsCompanies adopt different philosophies to market their products and services. An analysis ofevolution of marketing thought over last several decades and reliance of marketing managers onspecific marketing orientations, leads us to classify marketing concepts into several categories.These categories reflect the philosophies guiding the company’s marketing efforts. Thephilosophy adopted by a company should strike a balance between the interests of the company,customers, society and public. There are five competing concepts and an organization can chooseany one of them for conducting marketing activities. 1. The Production Concept – This is one of the oldest concepts of marketing and assumes that consumers will prefer those products and services that are easily available and affordable. Companies which adopt this philosophy for their marketing should focus on improving production and distribution efficiency. Production concept is a useful philosophy under situations where demand is more than supply and the companies are trying to increase production and when production costs are high. Companies are trying to achieve economies of scale. Under such conditions, it is likely that quality of products is neglected and service to customers is very impersonal. 2. The Product Concept assumes that consumers will prefer those products that offer quality, performance or innovative features. Managers in such companies focus on developing superior products and improving the existing product lines by devoting time to innovations. The problem with this orientation is that managers forget to read the customer’s mind and launch products based on their own technological research and scientific innovations. Very often it is observed that innovations enter the market before the market is ready for the product, or is aware or clear about its benefits. 3. This product-oriented management with excessive attention to product rather than customer leads to short-sightedness about business. This was termed as “MarketingEDUPROZ Page 15
  16. 16. Marketing Myopia” by Prof. Theodore Levitt of Harvard Business School. He recommended that companies should have a clearer and broader vision of business they are in and should adapt to the changes in the needs of the customers and in the environment. For example, a company like KODAK should not think they are only in the business of selling cameras and photographic films. They should believe that they are in the business of preserving memories for customers and photography in general 4. The Selling Concept – The Selling concept assumes that consumers generally, will not buy a company’s products unless aggressive selling and promotion efforts are undertaken. It also holds that consumers typically do not think of buying these products which are non-essential goods without persuasion or aggressive selling action. Use of this concept leads people to believe that marketing is all about selling. The problem with this approach is the belief that the customer will certainly buy the product after persuasion and will not complain even if dissatisfied. In reality, this does not happen and companies pursuing this concept fail in business. This approach is applicable in the cases of unsought goods such as life insurance, vacuum cleaners that buyers normally do not think of buying. 5. The Marketing Concept – The Marketing Concept proposes that a company’s task is to create, communicate and deliver a better value proposition through its marketing offer, in comparison to its competitors; to its target segment and that this customer oriented approach only can lead to success in the market place. To day, marketing function is seen as one of the most important function in the organization. Many marketers put the customers at the centre of the company and argue in favor of such a customer orientation where all functions work together to respond, serve and satisfy the customer. Many successful and well known multinational companies have adopted marketing concept as their business and marketing philosophies. Many Indian companies in the banking and other service sectors follow customer orientation and service as their motto. According to this concept, a company’s marketing effort must start right from identifying, through Market Research, exact needs & wants of the target market. Table 1.1. Differences between Selling and Marketing Concepts 2. Marketing Concept 1. Selling Concept 4. Emphasis on Customer needs and 3. Emphasis on Product wants 6. Goal is to produce what is needed by 5. Goal is to sell what is produced 7. the customers 8. Aggressive Sales and Promotion 9. All the departments of the company used 10. work together for serving theEDUPROZ Page 16
  17. 17. Marketing 11. customers 13. Objective is profit through 12. Objective is profits through Sales customer volume 14. Satisfaction 6. The Societal Marketing Concept – This marketing concept emphasizes that the key task of the company is not only to determine the needs and wants of the target markets and delivering the desired satisfaction but also to preserve and enhance the consumers and society’s overall well being.This concept calls upon marketers to build social, ethical and environmental considerations intotheir marketing practices. It seems to be an appropriate philosophy for marketing at this timewhen there is environmental degradation and social services have been neglected in India. In therecent years, we have been witnessing a lot of complaints about products and packaging that areharmful to health and ecology. Marketers must come forward to protect the interest of both thecustomers and the environment and this they can achieve by adopting or following the societalmarketing concept.Summary 1. Marketing is a dynamic and all pervasive subject in business 2. The main functions of Marketing are Marketing Research and Information Management, Product Planning, Advertising and Sales Promotion, Selling, Physical Distribution and Pricing. 3. Marketing plays an important role in the economic development of a country like India. It is also very important from the customer and societal point of view as it helps improve the standard of living of people through better product and service offers. 4. Marketing as a concept has evolved over a period of time and has witnessed changes and modifications in its philosophy. There are five concepts which describe this development and offer ways to companies on how to conduct their business – Production Concept, Product Concept, Selling Concept, Marketing Concept and Societal Marketing Concept However, the first three are of limited use today.Unit 2 Strategic Marketing ProcessIntroduction.Marketing strategies and programs in the organizations are derived from the companywidestrategic planning. Thus, you have to understand how organizations develop their strategic plans.After analyzing the strategic plan, you should be able to relate these plans’ role in guiding theEDUPROZ Page 17
  18. 18. Marketingmarketers, and their application in serving the customers with the help of company’s employeesas well as intermediaries.Learning Objective1: Describe the companywide strategic planning.Strategic PlanningStrategic planning is the process of defining the company mission, setting the long term andshort term objectives, designing an appropriate business portfolio and coordinating functionalstrategies of the company.Looking at the definition, you will be able to identify four important factors of the strategicplanning. They are1. Defining the company mission.2. Formulating the objectives3. Designing an appropriate business portfolio4. Coordination at business levels.Now, we will discuss the above points and their relevance to the marketing plans.Defining the company mission:An organization mission explains who its customers are, how it satisfies their needs and whattype of products it offers.Let me explain this concept by taking a mission statement of the Trends in Vogue, a familybeauty saloons chain from Cavin Kare, a well known fast moving consumer goods (FMCG)company in India. The mission statement is1. “To provide the customer an unparalleled service experience2. To provide the customer the largest range of “natural” products and services3. To be the first to introduce sub-formats and value-added services4. To be the most preferred family beauty salon chain for customers, employees andAlliance partners.5. To provide consistent profits to all stakeholders”Trends in Vogue mission statement analysis:EDUPROZ Page 18
  19. 19. Marketinga. Who its customer is? Mission statement 4 states “family who are going to beautysaloons” as their customers.b. How it satisfy their needs? Mission statement 1 and 2 describes the needs as unparalleledservice experience and offering largest range of natural products and servicesc. What type of products it offers? The company offers natural products in their beautysaloons.Formulating the objectives.Mission statement provides a general view of the company’s products and its method ofsatisfying the customer. Mission statement is once again divided into specific objectives whichare stated in writing, can be measured quantitatively and fixed for particular time. Objectivesmay be business oriented or market oriented. They help marketers to develop strategies andprograms. You will come to know how organizations deduce their mission into differentobjectives form the following example of Bharat Electronics Limited (BEL), a public sectorenterprise in the electronic field.Mission: To be a customer focused globally competitive company in defence electronics and inother chosen areas of professional electronics, through quality, technology and innovation.Objectives:1. To be a customer focused company providing state-of-the-art products & solutions atcompetitive prices, meeting the demands of Quality, delivery & service.2. To generate internal resources for profitable growth.3. To attain technological leadership in defence electronics through in-house R&D, partnershipwith defence/research laboratories & Academic institutions.4. To give thrust to exports.5. To create a facilitating environment for people to realize their full potential throughcontinuous learning & team work.6. To give value for money to customers & create wealth for shareholders.7. To constantly benchmark company’s performance with best-in-class internationally.8. To raise marketing abilities to global standards.EDUPROZ Page 19
  20. 20. Marketing9. To strive for self-reliance through indigenizationDesigning an appropriate business portfolio.After setting mission and objectives, management will develop its business portfolio.Business portfolio is the right mix of businesses that company operates and products that offersto customers.Portfolio analysis is the process by which company analyze its products and businesses.Company develops their business portfolio in two stepsa. Analyze the existing business portfolio and decide which business should receive more, less orno investment.b. Developing the new business portfolio for future to meet growth opportunities and eliminatingthe unprofitable portfolios.Analyzing the existing business portfolio:The current business portfolio of the company is analyzed by the businesses in which it operates.To make it clearer, let me take an example of ITC group. The company operates in FMCG,hotels, paper boards, specialty papers and packaging and agribusiness. These businesses areindependent from each other and have their mission and objectives separately. These subsidiariesof organizations are called as Strategic business units (SBU)Strategic business unit: The unit of the company that has separate mission and objectives andthat can be planned independently from other businesses.Characteristics of SBU.1. It may be brand, or a product line or separate division of the company.2. It is having distinct mission and objectives.3. It is managed by separate executive team.Strategic planning models used in assessing the existing businesses:1. BCG matrix ( Boston Consultancy Group)2. GE matrix ( General electric)BCG matrix: This model is used to identify company’s SBU’s position in the market. This modelidentifies the SBU’s strength, weaknesses, opportunities and threats on the basis of marketgrowth rate and relative market share. This model is also known as growth share matrix.EDUPROZ Page 20
  21. 21. MarketingFigure 2.1.High LowRelative Market ShareAxis components:1. Market growth rate: The rate at which market is growing2. Relative market share: Market share of the SBU divided by the market share of the largestcompetitor.Model components:Star: This category represents the high market share and high industry growth. SBU’s in thiscategory require large investment to defend their position. SBU will turn as cash cow after sometime.Cash cows: This category represents the low growth rate and high market share which is thecharacteristic of SBU operating in mature industry. Here company needs less investment to holdtheir position. Hence it generates more cash or in management terms we say cash cow can bemilked.Question Mark: This category represents high market growth and low market share. SBU’s inthis category has two options, either to invest heavily and bring them to star position or divest /liquidate from that position.EDUPROZ Page 21
  22. 22. MarketingDogs: SBU’s in this category generates less cash for the company as it operates in low growthand low market share. Usually companies will not invest in this category and try to liquidate ordivest.BCG matrix for ITC1. SBU: FMCGIndustry growth rate: 24% (AC Nielson retail audit report 2007)Company growth rate: 50% (the Hindu business line 19th January 2008)Company’s market share : 8% (outlook business)Largest competitor share: HUL: 54% (outlook business)Relative market share= 0.142. SBU: Paper boardIndustry growth rate: 7.2% (the Hindu business line 27th May 2007)Company growth rate: 11% (the Hindu business line 19th January 2008)Company’s market share: 55%Largest competitors share: BILT 35%ITC’s FMCG segment analysis shows that though it is market leader in some categories theiroverall relative market share is 0.14. Company is in the high growth low relative market sharearea i.e. question mark position. ITC should invest heavily to convert its SBU position into star.ITC’s Paperboard industry is in low growth and high market share category i.e. in cash cowsegment. It should plan for investing the cash generated from this position into other businesses.GE matrix:1 Management can use the GE business matrix to classify SBU’s on the basis of two factorsa. Market attractiveness: Market size, entry barriers, competitors, technology andprofit margin are some factors used to analyze the market attractiveness.b. Business position can be determined on the basis of market share, SBU size, R&D capabilitiesand cost controlsEDUPROZ Page 22
  23. 23. MarketingEach cell in the model represented by the particular strategy namely, invest strategy, protectstrategy, harvest strategy and divest strategy2 Invest strategy: In this position SBUa. Should receive ample resourcesb. Should support by well financed marketing efforts.3 Protect strategy: SBU’s in this position shoulda. Allocate the resources selectively.b. Develop strategies which help in maintain its market position.c. Generate cash needed by other SBU’s.Business positionHigh Medium LowFigure 2.24. Harvest strategy: SBUs should not receive substantial new resources and if required, sell them.5. Divest strategy: SBUs which falls into this category should not receive any resources and sell ior shut it as early as possible.Developing the new business portfoliosEDUPROZ Page 23
  24. 24. MarketingAfter analyzing the existing business of the company, let us discuss company’s future plans i.e.growth or downsizing. Company adopts growth strategies to become more competitive in themarket, tap new opportunities and become preferred employer. Downsizing is used when theproduct or market became unattractive to it. The Ansoff Product-Market Growth Matrix is amarketing tool created by Igor Ansoff and first published in his article “Strategies forDiversification” in the Harvard Business Review (1957). The matrix allows marketers toconsider ways to grow the business via existing and/or new products, in existing and/or newmarkets.Ansoffs model of product/ market expansion.Figure 2.3.a. Market penetration: A strategy used in increasing the sales of company’s existing productswithout modifying it in the existing market.Characteristics of market penetration.1. Serve customer with existing products by opening new stores.2. Increase the promotion activities to increase the consumption.3. Improve the service offerings.Café- coffee day a reputed coffee chain in south India, started its operation in brigade road,Bangalore, in the year 1996. It offers different varieties of the coffee to its existing customers.Today it is having 100 stores in Bangalore.b. Market development: In this strategy company identifies the new markets to sell their existingproducts.EDUPROZ Page 24
  25. 25. MarketingIn case of market development company identifies and develops new markets for its existingproductsCafé coffee day, enthused by the success of offering a world-class coffee experience, has openeda Café in Vienna, Austria and is planning to open other Cafes in the Middle East, EasternEurope, Eurasia, Egypt and South East Asia in the coming months.(Source: www.cafécoffeeday.com)c. Product development: In this strategy, company identifies new product and sells them existingmarkets.Café coffee day added quick bites and ice-cream in their menu to cater to the needs of customers.d. Diversification: A strategy for company growth through starting up or acquiring businessesoutside the company’s current products and markets.Café coffee day started offering tea and cold drinks in its highway café retail outlets. Thesehighway café outlets offer excellent service to the travelers on the high way.Downsizing: Eliminating the unprofitable products of the company from its product lineIn the year 2000 M.S. Banga then chairman of Hindustan Unilever limited (HUL), used powerbranding strategy to improve the sales and productivity. He reduced HUL’s number of productsfrom 110 to 35.Coordination at business levels1. Organization’s strategies exist in three different levels. They are corporate level, businesslevel and operation level.2. Corporate level:a. High risk and greater profitb. Greater need for flexibility exists.c. Long term planningd. Choice of businesses, dividend policies, sources of long-term financing, and priorities forgrowth3. Operation level strategiesa. Implement the overall strategy formulated at the corporate and business levelsEDUPROZ Page 25
  26. 26. Marketingb. Involve action-oriented and operational issuesc. Relatively short range and low riskd. Modest costs: depend upon available resourcese. Relatively concrete and quantifiable4. Business level strategiesa. Acts as a bridge between decisions at the corporate and functional levelsb. Less costly, risky, and potentially profitable than corporate-level decisionsc. More costly, risky, and potentially profitable than functional-level decisionsd. Include decisions on plant location, marketing segmentation, and distributionIn the strategic plan, company brings the synergy between all the three levels. To make it moreclearer, company’s marketing strategy are different from HR strategies but it should bringcoordination between both to meet organization’s objectives. Company should bring thecoordination between its growth plans and segmentation then only the operation strategy workswell.SWOT analysisS W O T represents strengths, weaknesses, opportunities and threats. SWOT analysis helpscompany to implement its strategies by leveraging strengths, overcoming from weaknesses,tapping the opportunities and minimizing the threats1) Strengths:Following are the list of strengths that company should havei. Valuable competencies or know-howii. Valuable physical assetsiii. Valuable human assetsiv. Valuable organizational assetsv. Valuable intangible assetsvi. Important competitive capabilitiesEDUPROZ Page 26
  27. 27. Marketing2) Weakness is something a firm lacks, does poorly, or a condition placing it at a disadvantage.Resource weaknesses relate to inferior or unproven skills, expertise, or intellectual capital andLack of important physical, organizational, or intangible assets.3) Opportunities: Opportunities are those which match with its financial and organizationalresources, can generate profits for long term and become strength in future.4) Identifying External Threatsi. Improved technologyii. Improved products by competitorsiii. Dumping of materialsiv. Unfavorable political situationv. Potential of a hostile takeovervi. Change in the demographySWOT helps marketer to understand the current position of the company. It also helps toleverage its strengths to improve the performance and tap the opportunity that exists.Weaknesses and threats analysis helps company to overcome from them and become more agile.Learning Objective 2: Understand the marketing mix exists in the companyDeveloping the marketing mix.Marketing mix: The product, its price, promotion and distribution blended together to getfavorable response from the customer.This is also called as 4P’s of Marketing or Market assortment.1. Product: It is a good, service, idea, place or person that offered to customer to satisfy his/herneed. The attributes of product are variety, quality, warranty, design, packaging, and serviceFor example, Marico, a FMCG company offers hair oil in two brand names i.e. parachute andnihar. The brand nihar, offered in two types of packaging i.e. Sachets and bottles and offered intwo qualities i.e. coconut oil and perfumed hair oil.2. Price: the value at which customer is willing to purchase the product.For example, BSNL offers prepaid service recharge coupons in Rs175, Rs335, Rs500, Rs 1000,Rs2000 and Rs 5000 denominations.EDUPROZ Page 27
  28. 28. MarketingFigure 2.4.The marketing mix3. Place: Distribution of goods from the factory to the target customer. It includes distributors,stockiest and retailers. To illustrate, Zenith computers uses authorized distributor to sell laptopsand desktops to the target customers.4. Promotion: communicating product features and its uses to target customers through differentMedias. For example, Bharati group promotes its cellular services (AIRTEL) through TV, Radioand news paper.EDUPROZ Page 28
  29. 29. MarketingLearning Objective 3:Discuss how to design marketing planning modelsMarketing planning:Though strategic plan exists in the organization but it is very essential to have functional plans tocoordinate departmental activities. For example, the marketing plan guides the sales anddistribution activities of the organization. Therefore it is essential to know what the contents of amarketing plan are.Contents of marketing plana. Executive summary: Brief summary of plan, which help busy executives to go through thepoints very quickly.b. Analyzing the current market situation: The following factors should be answered in thissection.1. What is the intended market and market segment?2. What is the consumer buying behavior process for particular category of products?3. How conducive is the marketing environment to do the business?4. Whether company got right marketing mix for intended target customer?5. Who are major competitors and what are their marketing strategies?c. PEST analysis: In this section, the external environment of the company is analyzed to findopportunities and threats.( for detail see UNIT 3)d. Objectives and issues: This part of the marketing plan should discuss marketing objectives thatcompany would like to achieve in particular period and issues that may affect them.e. Marketing strategy: This section should highlight on1. Identifying the segmentation, target customer and positioning strategy2. 4P’s of marketing3. Planned activities: the following factors should be discussed in this section4. What are the programs that company plans to undertake?5. Who are responsible to monitor these programs?EDUPROZ Page 29
  30. 30. Marketing6. How much time it takes to complete the program?7. How much will it cost?8. Marketing Budget9. Control: Any program implemented need to be controlled to check its performance. Henceorganization should take periodic auditing by a review committee. The control process for theplan should be discussed in this section.Marketing Implementation and control.Marketing implementation: The process in which marketing strategies and plans are convertedin to proper marketing actions to achieve the objectives.Marketing implementation depends on the following factors:1. Organization structure2. Organization cultureMarketing control: The process of evaluating marketing performance and taking correctiveactions.Marketing control involves four steps. They area. Set specific marketing goals.b. Measure the marketing performancec. Evaluate the market performance against objectivesd. Take corrective actionsMarketing control is divided into two parts. They are operation control and strategic control.Operation control involves assessing the current activities against annual plan and takingcorrective actions. Strategic control is used to assess whether existing strategic plans of thecompany meets the opportunities exist for it. Marketing audit is used as a strategic control tool.According to Philip Kotler “marketing audit is comprehensive, systematic, independent andperiodic examination of a company’s environment, objectives, strategies and activities todetermine problem areas and opportunities and to recommend a plan of action to improve thecompany’s marketing performance”.Characteristics of marketing audit:EDUPROZ Page 30
  31. 31. Marketing1. Comprehensive.2. Systematic3. Independent4. periodicComponents of marketing audit:1. Marketing environment audit2. Marketing strategy audit3. Marketing organization audit4. Marketing systems audit5. Marketing productivity audit.6. Marketing function auditSummary:1. Strategic planning process involves defining the company mission, formulating the objectives,designing an appropriate business portfolio and coordination among functional strategies.2. BCG and General electric models are used to analyze existing market situation of SBU.3. SBU’s growth and downsizing strategies are determined by Ansoff model of product- marketgrowth matrix.4. Marketing mix or 4Ps of marketing is the assortment of product, place, price and promotion.5. Marketing implementation depends on organization structure and its culture.6. Marketing Audit is used as strategic control tool.Unit 3 Marketing EnvironmentIntroduction.A marketing oriented company always keeps tab on its external environment carefully to analyzeopportunities and threats. This external environment influences company’s strategies in twoEDUPROZ Page 31
  32. 32. Marketinglevels i.e. external macro environment and external micro environment. The macro environmentinvolves political and legal, economic and natural, social and cultural and technologyenvironment. The micro environment consists of supply chain, customer and competitor. Thesefactors are uncontrollable by the organization. Even the best company faces threat if one of theexternal environments is adverse to it. A moderate company will be successful if the externalenvironment favors it. Hence marketing companies should monitor the external environmentcarefully and continuously.Learning Objective -1 : Understand the need of environmental scanning.Environmental scanningThis is the process of gathering, analyzing and forecasting of external environments’ informationto identify opportunity and threats that company faces.Need for environmental scanning:It helps in1. Identifying the opportunities that company has in immediate future.2. Identifying the threats faced by the company.3. Demand forecasting4. Developing appropriate business plans.5. Adjusting the company strategy in changing competitive environment.Learning Objective 2: Analyze the influence of micro environment on company’s strategies.Analyzing the organization’s micro environmentMarketing department let alone can not satisfy all the needs of customer. Therefore it is essentialto integrate the functions of suppliers, publics, company departments and intermediaries increating the value to the customer. These forces are known as organization’s micro environment.Microenvironment: The forces which are very close to company and have impact on valuecreation and customer serviceFigure 3.1Forces in the micro environmentEDUPROZ Page 32
  33. 33. MarketingThe companyRemember in the previous unit we discussed about the strategic and marketing planning.Deducing a strategic plan in to specific marketing plan require coordination of other functionslike finance, Human resource, production, and research and development. For example, SafeExpress, a leader in the supply chain management solution wants to hold its position in the US $90 billion Indian logistics market. Company plans to expand its service areas in the comingmonths. To meet the targets of the marketing plan, other departments of safe express alsoexpanding their horizon. Company is coming out with logistics parks in different cities; plan’s tohold seven million square feet of warehousing capacity in the next three years and investing Rs10 billion in three years to meet that targets. The above example shows that company’smarketing plan should be supported by the other functional department activities also.IntermediariesMarketing intermediaries: The firms which distribute and sell the goods of the company to theconsumer.Marketing intermediaries plays an important role in the distribution, selling and promoting thegoods and services. Stocking and delivering, bulk breaking, and selling the goods and services tocustomer are some of the major functions carried out by the middlemen. Retailers, wholesalers,agents, brokers, jobbers and carry and forward agents are few intermediaries to name. Retailersare final link between company and customers. Their role in the marketing of product isincreasing every day.EDUPROZ Page 33
  34. 34. MarketingPublicsThese are microenvironment groups, which helps company to generate the financial resources,creating the image, examining the companies’ policy and developing the attitude towards theproduct.We can identify six types of publics1. Financial publics influence the company’s ability to obtain funds. For example, Banks,investment houses and stockholders are the major financial publics.2. Media publics carry news and features about the company e.g. Deccan Herald3. Advertisement regulation agencies, telecom regulation agency( TRAI), and insuranceregulation agency(IRDA) of the government4. Citizen action groups: Formed by the consumer or environmental groups. For example,people for ethical treatment of animals (PETA) or Greenpeace.5. General publics: a company should be concerned towards general publics’ attitude towardsits products and services.6. Internal publics: Employees who help in creating proper image for the company throughword of mouth.CompetitorsA company should monitor its immediate competitor. The product should be positioneddifferently and able to provide better services.SuppliersSuppliers are the first link in the entire supply chain of the company. Hence any problems or costescalation in this stage will have direct effect on the company. Many companies adopted supplierrelation management system to manage them well.CustomersA company may sell their products directly to the customer or use marketing intermediaries toreach them. Direct or indirect marketing depends on what type of markets Company serves.Generally we can divide the markets into five different categories. They area. Consumer market.b. Business marketEDUPROZ Page 34
  35. 35. Marketingc. Reseller marketd. Government market ande. International marketYou will come to know about these five different markets from the following example.MRF a tyre company sells its product directly to consumer (in case of urgency, customerpurchases directly from showroom) i.e. operates in consumer market. It operates in businessmarkets by selling tyres to companies like Maruti Udyog limited. MRF also sells TYREs toBMTC and KSRTC, transport organizations of Karnataka government. If MRF sells tyre inAfrican or American countries then it is operating in the international market. If MRF buys theold tyres, retreads it and sells it to the consumer at a profit then company is operating in thereseller market.Learning Objective 3:To analyze the influence of external macro environment on company’s plans.Company’s macro environment.Figure 3.2 Forces in the macro environment.Demographic Environment.EDUPROZ Page 35
  36. 36. MarketingDemography: The study of population characteristics like size, density, location, gendercomposition, age structure, occupation and religion.Demography statistics helps companies to develop their products in better way. These statisticsare also used in developing proper supply chain, communicating product information andchanging the product attributes. Demographic environment is analyzed on the basis of thefollowing factors.1. Age structure of the population2. Marital status of the population3. Geographic distribution of the population4. Education level5. Migration6. Occupation.Age structure of the population: from the following table you can generalize that India ishaving 48% population who are aged less than 21 and 28% of the population are in the bracket of21-25. Many marketing companies are focusing on these two segments. For example, RadioIndigo, FM radio station from Jupiter capital venture operates in Bangalore and Goa, playsinternational music. Radio indigo targets youth segment who like western music.TABLE 3. 1: POPULATION IN DIFFERENT AGE GROUPS AND THEIR PROPORTIONSTO TOTAL POPULATIONAge group Population PercentageAll Ages 1,028,610,328 100.00–4 110,447,164 10.75–9 128,316,790 12.510 – 14 124,846,858 12.115- 19 100,215,890 9.720 – 24 89,764,132 8.725 – 44 284,008,819 27.645 – 64 139,166,661 13.565 – 79 41,066,824 4.080+ 8,038,718 0.8Less Than 18 422,808,543 41.1Less than 21 492,193,906 47.9Age no stated 2,738,472 0.3Source: C2 and C14 Table, India, Census of India 2001.EDUPROZ Page 36
  37. 37. MarketingMarital status of the population:TABLE 3.2: POPULATION BY MARITAL STATUS AND SEX: INDIA – 2001 Number of Persons Percentage toMarital status ( in ‘000) TotalPersons Males Females Males FemalesTotal 1,028,610 532,157 496,454 100 100Never Married 512,668 289,619 223,048 49.8 54.4Married 468,593 231,820 236,773 45.6 43.6Widowed 44,019 9,729 34,290 4.3 1.8Divorced / Separated 3,331 988 2,343 0.3 0.2Source : C2 and C14 Table, India,Census of India 2001 Half of the Indian population falls into the never married category. This provides an opportunityfor organized wedding industry. Indian wedding industry is worth Rs 1, 25,000 crore today.Vintage group and shaadi.com are few to name in this industry. These companies are offeringend to end solution to the customers who are looking for lavish wedding in the exotic locationsboth in domestic and abroad.Geographical distribution of the populationTable 3.3; Rural – urban distribution of the population PopulationPersons 1,028,737,436Males 532,223,090Females 496,514,346Rural 742,617,747Urban 286,119,689% Urban population 27.8%Rural India with 74 crore population is a biggest market. Companies are trying to get a pie in thisuntapped market. For example, DCM Shriram limited, opened ‘Hariyali’ bazaars in rural market.These bazaars offer quality agriculture inputs, financial services, and farm output services.Education level: More than 3 crore people in India either have graduation or post graduation.This has led to the growth of many sunrise sectors. This educated population fuelled the growthof information technology (IT), information technology enabled services (ITES), andbiotechnology industries.TABLE 3.4: NUMBER AND PERCENT LITERATES BY LEVEL OF EDUCATION: INDIA2001EDUPROZ Page 37
  38. 38. Marketing Absolute NumbersLevel of education (000′)Persons Males FemalesLiterate 560,688 336,534 224,154Literate without educational level $ 20,023 11,361 8,662Below Primary 144,831 81,148 63,683Primary 146,740 83,525 63,215Middle 90,227 55,940 34,286Matriculation/Secondary 79,230 51,202 28,028High secondary/ Intermediate/PreUnivercity/ Senior 37,816 24,596 13,220SecondaryNon technical diploma or certificate not equal to degree 386 259 128Technical diploma or certificate not equal to degree 3,667 2,901 766Graduate and above 37,670 25,533 12,137Migration: Geographical shift in the population is becoming an interesting area in thedemographic studies. The Table 6, list out the various reasons for migration.TABLE 3.5: NUMBER OF MIGRANTS BY PLACE OF BIRTH – INDIA 2001 Migrations by Place Category Percentage of birthA. Total Population 1,028,610,328B. Total Migrations 307,149,736 29.9 Migrants within the state ofB.1 258,641,103 84.2 enumeration Migrants from within theB.11 181,799,637 70.3 districts Migrants from other districtsB.12 76,841,466 29.7 of the state Migrants from other states inB.2 42,341,703 13.8 India Migrants from otherB.3 6,166,930 2.0 countriesSource: Table D1 India,Census of India 2001.TABLE 3.6: REASONS FOR MIGRATION OF MIGRANTS BY LAST RESIDENCE WITHDURATION (0-9 YEARS) INDIA 2001 Number of Percentage toReason for migrations Migrants Migrants Persons Males Females Persons Males FemalesEDUPROZ Page 38
  39. 39. MarketingTotal migrants 98,301,342 32,896,986 65,404,356 100.0 100.0 100.0Reason for migration : 14,446,224 12,373,333 2,072,891 14.7 37.6 3.2Work / EmploymentBusiness 1,136,372 950,245 186,127 1.2 2.9 0.3Education 2,915,189 2,038,675 876,514 3.0 6.2 1.3Marrige 43,100,911 679,852 42,421,059 43.8 2.1 64.9Moved after birth 6,577,380 3,428,673 3,148,707 6.7 10.4 4.8Moved with households 20,608,105 8,262,143 12,345,962 21.0 25.1 18.9Other 9,517,161 5,164,065 4,353,096 9.7 15.7 6.7Source: Table D3, Censusof India 2001Marketers started identifying the niches in the migrated communities and offered their goods andservices. For example, Nandhini, an Andhra restaurant in Bangalore catering to the food needs ofthe Andhra community. Patrika, a Rajasthan based daily now available through out the country.Occupation:TABLE 3.7: DISTRIBUTION OF MAIN WORKED BY DIFFERENT INDUSTRIALCATEGORIES, INDIA 2001 Main Workers PercentageIndustrial category (’000s) (%)Total main workers * 312,972 100.0Agricultural & allied activities 176,979 56.6Mining & quarrying 1,908 0.6Manufacturing 41,848 13.4Electricity, gas and water supply 1,546 0.5Construction 11,583 3.7Wholesale, retail trade & repair work, Hotel and 29,333 9.4restaurantsTransport, storage & communications 12,535 4.0Financial intermediation, Real estate, business activities 6,109 2.0Other services 31,131 10.0Source : Industrial classification data based onsample Agriculture is the main occupation of the people in India but the share of other services isgrowing rapidly. The other service category includes IT and ITES. Employees of thesecategories have high disposable income. This has led to the opening of specialty stores andmanufacturing of the luxury items in the country.Political And Legal Environment.EDUPROZ Page 39
  40. 40. MarketingGovernment policies, legislations, regulations, and stability will directly affect the business.Therefore it is inevitable for the firm to closely monitor this environment. The political and legalforces are grouped into the following four categories.Monetary and fiscal policies: These policies regulate government spending, money supply andtax legislations.1. Social legislations and regulations. Environmental protection act which specifies theemission level.2. Government relationships with industries: Government subsidies and change in tariff ratewill have direct impact on the particular company.3. Legislations related to marketing: Following are the list of legislations which affect marketingactivities of the company.Table 3.8· Companies act 1956. · Industrial dispute act 1957· Consumer protection act · Minimum wages act· Payment of bonus act. · Environmental protection act· Industries development and regulation act. · Trade union act· Contract law · Factories act 1948· The contract labor (regulation and abolition) act1970. · Sales promotion employees’ act1976· Shops and establishment act 1953 · Copyright act 1957· Trade marks act 1999 · Patents act 1970· Designs act 2000 · Foreign exchange management act 1999Economic And Natural Environment:Consumer spending patternAccording to National sample survey 2005-06,1. Monthly per capita consumption in rural area: Rs625.2. Monthly per capita consumption in urban area: Rs1, 171.3. Food expenditure in monthly per capita consumption: 53 %( Rural area)4. Food expenditure in monthly per capita consumption: 40%( urban Area)The above data shows that most of the expenditure in monthly per capita income goes to the foodexpenditure only. Marketers in the non food category should promote heavily to change thisspending pattern. Companies in the food category should note that food expenditure in monthlyEDUPROZ Page 40
  41. 41. Marketingper capita expenditure is coming down. Hence extra efforts are required by these companies tosell their products.Interest rate: when interest rates are high, consumer tend not to make long term purchase likehousing. If the interest rate is low people put their money in alternative financial options wherethey get better return.Inflation: Higher the inflation rate lesser will be the purchasing power of the consumer. Hencegovernment always tries to control the inflation within the limit.Changes in income: The rise in the salaries of the employees, improved performance of stockmarket and better industrial growth led to the change in the income pattern in India. ManyIndians became millionaires and billionaires. Percentage of below poverty line is decreasing, butthe concern is rich and poor divide is growing.Natural Environment:Environmental concerns are growing over the years. Governments increased regulations tomanage the natural resources. Marketers should aware of such trends in the natural environment.Some of the factors which organizations should keep a vigil area. Inadequate raw materialsb. Global warming and pollution levels andc. Regulatory world.a. Inadequate raw materials: We are over depending on Middle East countries for petroleumproducts. Automobile companies are improving their technologies and also planning to come outwith hybrid cars which use alternative fuels.b. Global warming is a big issue today.c. Regulatory world; The Indian government through environmental protection act, makingstringent rules on emission and environment standards. Companies, particularly in automobilesshould adhere to those norms, which are expensive and time consuming.Social and cultural environment:1. Working women and rise of metro sexual man.: Number of women who are working inIndia is increasing. This segment is looking towards products which help them in bringing betterwork life balance. MTR a fast food giant in south India started offering ready to eat products tothis segment. These products are instant in nature where a woman dips a product in the hot waterfor 2-3 minutes and serves. Metro sexuality is another new phenomenon, wherein a man alsoassumes the role of women like purchasing household items and helping in kids’ education etc. Itmade marketers’ task more difficult on positioning their products.EDUPROZ Page 41
  42. 42. Marketing2. Time short people: This segment involves people who work long hours and have lesspersonal time. These people are looking for products which satisfy them quickly andconveniently. For example, Easy bill, from Hero group offers one stop solution to consumer topay their utility bills and do other financial transactions.Technology environment1. Growth of information technology and biotechnology industries: Information technology hasrevolutionized the lives of the people. It bought dramatic changes in the way organizationsoperates. It helped in cost reduction, automation, better communication and efficiency in theorganizations. Indian banks few years ago use to take lengthy time to process the customerrequests reduced it to few hours because of information technology.Learning Objective 4:The difference between the external macro and micro environment.Difference between Micro environment and Macro environment.Table 3.9 Macro environment Micro environmentSize Large smallControl Cannot be controlled Can be controlled to some extentUncertainty Very high lowcomplexity High low Political, social, cultural, technology, Customer, publics, competitors,Examples demography and natural environment suppliers and intermediaries.PEST (Political and legal, economic and natural, social and cultural, and technologyenvironment) Analysis:Table 3.10Factors Opportunity Threat1. Political and legal environmenta. Monetary policyb. Fiscal policyc. Environmental policyd. Lobby groups2. Social and cultural environmenta. Genderb. demographicsc. work culture3. Economic and natural environmentEDUPROZ Page 42
  43. 43. Marketinga. Incomeb. Spending powerc. Inflationd. Interest ratee. Raw materialsf. Taxation4. Technology environmenta. Entry barriersb. Growth of technologyc. Transfer of technologySummary1. Environment scanning is necessary to understand opportunities and threats faced by thecompany.2. Micro environment factors like marketing intermediaries, suppliers, competitors, publics andcustomers influences company’s strategies. These are controllable to some extent.3. Population variables like age, gender, marital status and occupation helps the company toassess the market and change or develop their offerings4. Shortage of raw material and increase in the income disparity are immediate concerns of theorganizations.5. Working women and time short people changing the socio- cultural environment of thecountry.6. Technology is helping company to reduce cost, increase the efficiency and save time.7. Micro and macro environment are differentiated on the basis of size, complexity, anduncertainty.Unit 4 Understanding the Marketing Information Systems (MIS)IntroductionIn the earlier chapter, we saw how marketing environment is changing and presenting newopportunities and threats to an organization. The main responsibility for identifying significantchanges in the market place falls on the marketing department. They are better placed and haveadvantages in undertaking this task because they are regularly interacting with customers andobserving competition.EDUPROZ Page 43
  44. 44. MarketingThe Marketing Departments need to develop Marketing Information Systems that providethem information about buyer wants, preferences, behavior and also about competition. They areable to do this by setting up systems and marketing related research methods to collect thisvaluable information which is ultimately used to help make marketing decisions.A Marketing Information System is a set of procedures to collect, analyze and distributeaccurate, prompt and appropriate information to different levels of marketing decision makers.Learning Objective 1: Understand the concept of Marketing Information System, as well as itscharacteristics & benefits.Characteristics of MISPhilip Kotler defines MIS as “a system that consists of people, equipment and procedures togather, sort, analyze, evaluate and distribute needed, timely and accurate information tomarketing decision makers.Its characteristics are as follows:1. It is a planned system developed to facilitate smooth and continuous flow of information.2. It provides pertinent information, collected from sources both internal and external to thecompany, for use as the basis of marketing decision making.3. It provides right information at the right time to the right person.A well designed MIS serves as a company’s nerve centre, continuously monitoring the marketenvironment both inside and outside the organization. In the process, it collects lot of data andstores in the form of a database which is maintained in an organized manner. Marketers classifyand analyze this data from the database as needed.With the advent of Computer Technology, MIS has taken a step further to provide managersdirect access to the databases. This system called MarketingDecision Support System (MDSS) links a decision maker to relevant databases and analysistools, thereby allowing him to gain deep insights into needs and trends of customers with thehelp of sophisticated statistical analysis.Today companies organize the information in databases such as customer database, productdatabase, and field sales database and combine them to be stored in a huge database called DataWarehouse. The process of searching through information in data warehouse to identifymeaningful patterns that guide decision making is called Data Mining.Benefits of MISVarious benefits of having a MIS and resultant flow of marketing information are given below:EDUPROZ Page 44
  45. 45. Marketing1. It allows marketing managers to carry out their analysis, planning implementation and controlresponsibilities more effectively.2. It ensures effective tapping of marketing opportunities and enables the company to developeffective safeguard against emerging marketing threats.3. It provides marketing intelligence to the firm and helps in early spotting of changing trends.4. It helps the firm adapt its products and services to the needs and tastes of the customers.5. By providing quality marketing information to the decision maker, MIS helps in improving thequality of decision making.Types of Marketing InformationA Marketing Information System supplies three types of information.1. Recurrent Information is the data that MIS supplies periodically at a weekly, monthly,quarterly, or annual interval. This includes data such as sales, Market Share, sales call reports,inventory levels, payables, and receivables etc. which are made available regularly. Informationon customer awareness of company’s brands, advertising campaigns and similar data on closecompetitors can also be provided.2. Monitoring Information is the data obtained from regular scanning of certain sources such astrade journals and other publications. Here relevant data from external environment is capturedto monitor changes and trends related to marketing situation. Data about competitors can also bepart of this category. Some of these data can be purchased at a price from commercial sourcessuch as Market Research agencies or from Government sources.3. Problem related or customized information is developed in response to some specificrequirement related to a marketing problem or any particular data requested by a manager.Primary Data or Secondary Data (or both) are collected through survey Research in response tospecific need. For example, if the company has developed a new product, the marketing managermay want to find out the opinion of the target customers before launching the product in themarket. Such data is generated by conducting a market research study with adequate sample size,and the findings obtained are used to help decide whether the product is accepted and can belaunched.Components of MISThe following diagram shows a typical Marketing Information System with its components.Which are?1. Internal Records System2. Marketing Intelligence SystemEDUPROZ Page 45
  46. 46. Marketing3. Marketing Research System4. Analytical Marketing SystemFig 4.1 The Marketing Information SystemInternal Records SystemThis includes information on (i) Order to payment cycle and (ii) sales information systems.Order to payment cycle has a system which records, the timing and size of orders placed byconsumers, the payment cycle followed by consumers and the time taken to fulfill the orders, inthe shortest possible time. Customers place order through sales people and companies dispatchthe goods and receive payments directly or through bank. A proper record system pertaining toorder – to – payment cycle management helps mangers to decide on production and dispatchschedule, inventory and accounts receivable schedule and also logistics and distributionmanagement schedules,Sales Information Systems record everything in the sales Department, starting from Sales CallReports to prospects history to Sales territory and quota information for better sales planning andforecasting purpose.Marketing Intelligence SystemThis is a set of procedures and sources used by managers to obtain everyday information aboutdevelopments in the marketing environment. This system supplies ‘happenings’ data unlikeInternal Records System which supplies ‘results’ data. Marketing managers collect data frompublished sources like books, magazines and journals; by talking to customers, intermediariesEDUPROZ Page 46

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